Toledo Chamber Blog

In a world where the “Fight for Fifteen,” misclassification lawsuits, and collective action litigation are all landing on HR Professionals’ desks daily, it is imperative that the business community keep up with the current wage and hour issues. The final exemption rules were recently issued and beginning December 1, 2016, employees and employers will see some major changes in classifications and wage & hour rules. To help alleviate confusion and offer clear guidelines for our members, the Toledo Regional Chamber of Commerce hosted a learning opportunity with local firm Eastman & Smith.​Jim Yates, attorney at Eastman and Smith, spent the morning with Chamber members, educating them on the changes to come. His presentation, titled “Final Exemption Rules Issued: Now What?” briefly covered information on legislation that voters will likely see on upcoming ballots (IE: minimum wage increases), but mainly focused on the exemption rules that will be enforced come December.

The New White Collar Exemptions (EAP) are as follows:Executive

Primary Duty = Managing

Individual regularly directs the work of others (2 FTEs)

Can hire & fire, or recommendations are given significant weight

Administrative

Primary Duty = office or non-manual work related to management or general business operations

PLUS (Meaning to qualify for EAP or HCE Status the employee must meet the qualifications of Executive, Administrative or Professional outlined above, and these additional requirements)

Must be paid on a salary basis

Not subject to deductions because of variations in quality or quantity of work

Must meet minimum salary level

$913 per week ($47,476 annually)

Final HCE Salary Level: $134,004

The minimum salary level was last changed in 2004. As of May 18, 2016 the Final White Collar Rules (summarized above) changes are:

Salary level for EAP exemptions

Salary level for HCE exemptions

Automatic updates to new salary levels every three years

This Legislation

Does NOT change duties test

Does NOT change salary basis test

Does NOT Address compensable “after hours” work

​Bonuses, Incentives and CommissionsBonuses, incentives and commissions may also be effected by the changes.

Up to 10% of bonuses ($4,747.60) will count toward new salary level

Must be paid quarterly to count

Must pay 90% of weekly amount ($821.70) and can catch up additional amounts due at the end of each quarter

The changes made will also incur Automatic “Updates” every three years, which will be equal to the 40th percentile of full time salaried earnings in lowest Census Region. The Department of Labor will provide notice in the Federal Register 150 days before the update and post the information on their website. The estimates for 2020 are $51,168 EAP and $147,524 HCE.

Yates anticipates many implications and consequences in the workplace as exemption statuses and/or salary levels change, including overtime implications, bonus and benefit changes, flexibility shifts, payroll changes, and a potential shift in employee morale. He cautioned attendees to approach these changes professionally and encouraged them to have an excellent communication strategy in place. He anticipates that HR professionals will spend more time on compliance and record keeping in the future, as well as need to update their payroll systems and job descriptions to avoid confusion.

James B. Yates is a member in Eastman & Smith Ltd.’s Labor and Employment group, a Senior Professional in Human Resources (SPHR), and chairman of the Chamber’s workplace regulations committee.

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Emily Dammeyer is the Communications Manager at the Toledo Regional Chamber of Commerce. She has a background in Social Media Management and received a degree in Organizational Communication from Miami University.